Tell us something we don’t know….AND we’re still borrowing $100 million A DAY to prop up this fiction.
Australia’s gone from the envied, trophy economy of the world with a budget surplus and billions in the bank, to having the fastest growing public debt in the entire world all in less than 10 years. All brought to you by a hopeless Labor government and sustained by a recalcitrant senate of Labor and Greens in opposition.
This letter to the Oz skewers the issue:
“.. Blind Freddy can see the economy is a basket case. A country where the only growth is in cafes, nail bars and renovated homes that are flipped back on the market is a country going nowhere..”
Joanna Wriedt, Eaglemont, Vic
“….A damning Treasury-commissioned independent review of the former Labor governmen…t’s unprecedented spending response to the global financial crisis has found it was a “misconceived” waste of money, fundamentally weakened Australia’s economy, almost destroyed parts of the manufacturing sector and inflicted more long-term harm than good.
The review is also scathing of government failure on both sides of politics to address the budget crisis triggered by the $100 billion fiscal stimulus project, which has saddled the nation with the fastest-growing public debt in the world. “There is no evidence fiscal stimulus benefited the economy over the medium term,” says the paper, to be released today.
It says the stimulus was “misconceived”, with an emphasis on transfer payments and “unproductive expenditure such as school halls and pink batts”.
Revenue from iron ore exports fell, despite the strong market prices, while there was only a small lift from coal exports.
The first economic study of its kind into government fiscal stimulus policy, commissioned by Treasury secretary John Fraser and conducted by economist Tony Makin, argues that the stimulus rolled out by then prime minister Kevin Rudd and his treasurer, Wayne Swan, from late 2008 ultimately damaged the country’s competitiveness.
“The government’s fiscal response to the GFC subsequently weakened the economy by contributing to the dollar’s strength, and by creating pervasive policy uncertainty about how the budget would be repaired,” the paper says. “In sum, the nature of Australia’s fiscal stimulus was misconceived because it emphasised transfers, unproductive expenditure such as school halls and pink batts, rather than tax relief and/or supply side reform, as occurred, for instance, in New Zealand, where marginal income tax rates were reduced, infrastructure was improved and the regulatory burden on business was lowered.
“The scale of spending was unnecessarily large and subsequently proved counter-productive by working against keeping interest rates and the exchange rate lower for considerably longer, as occurred during the Asian crisis.
“The damage done by the stimulus program also led to a decline in the viability of parts of the manufacturing sector, including the motor vehicle industry….” Labor spending was a blow to economy after GFC, says report